Lai Sun unit sells stake in AIA Central for HK$1.42b
A unit of Lai Sun Development has sold its stake in the AIA Central skyscraper for HK$1.42 billion in a bid to boost liquidity.
The move comes just weeks after the Hong Kong developer disposed of its interest in an industrial building in the city as it is seeking to overturn a mountain of debt.
Lai Sun said it had signed an agreement to sell the shareholdings of its Peakflow Profits unit in Bayshore Development, the owner of AIA Central, to Grand Design Development, a subsidiary of insurer AIA Group.
The 38-storey office tower at 1 Connaught Road Central has served as the regional headquarters of Asia’s biggest insurer since 2005.
Peakflow Profits is a wholly owned subsidiary of Lai Sun Development and an indirect, non-wholly owned unit of Lai Sun Garment (International), according to an exchange filing.
AIA Group will hold the remaining stake in Bayshore Development after the disposal.
The proceeds from the sale would go towards repayment of bank loans and general working capital for Lai Sun Development, the companies said in a statement.
Lai Sun Development was saddled with total liabilities of more than HK$34.69 billion for the six months to January 31, according to its interim results.
Each of Lai Sun’s units is expected to record a loss of about HK$154.6 million on the disposal, according to the exchange filing.
“The disposal enables the vendor to realise the value of the property investment, thereby enhancing the cash-flow and financial position of the [Lai Sun Garment] group and the [Lai Sun Development] group as a whole,” the companies said, adding the deal was “prudent” while the terms and conditions of the sale were “fair and reasonable”.
In mid-March, Lai Sun Development sold some of its property assets in Wyler Centre Phase II in Kwai Chung for HK$80 million, representing an estimated loss of HK$6 million.
The firm said in a filing the sale represented its “commitment to its non-core asset disposal plan” aimed at enabling it to reallocate more financial resources for capital structure enhancement.